U.S. IS ABANDONING 'SHOCK THERAPY' FOR THERUSSIANS

By ELAINE SCIOLINO,

Published: December 21, 1993

WASHINGTON, Dec. 20—
The Clinton Administration's top Russia specialist said today that the surprisingly large support for foes of reform in Russia's parliamentary elections last week showed that there had been too much emphasis on remaking the economy of Russia and not enough on improving the daily lives of its people.

Strobe Talbott, the State Department's Ambassador at Large for Russia and other countries of the former Soviet Union, also said the United States was looking to other Russian reformers as well as President Boris N. Yeltsin to bring change to the troubled country, even if they were Mr. Yeltsin's political enemies. 'Shock Therapy' Has Failed

While Mr. Talbott was characteristically cautious and noncommittal, his remarks illuminated an important shift in official American thinking: an admission, in effect, that the "shock therapy," the-faster-the-better approach to reform advocated by the West -- and until recently by Mr. Yeltsin -- has not worked.

In the first on-the-record admission that Washington is rethinking its strategy on Russia, Mr. Talbott acknowledged that the Administration had begun "intensive deliberations" on "refining, focusing and intensifying our reform support efforts" to take account of the election results.

The goal, Mr. Talbott added, is to find a way for "less shock and more therapy for the Russian people."

Secretary of State Warren Christopher sounded the same theme in a meeting with reporters in New York tonight, The Associated Press reported. Saying the vote should be taken as a "wake-up call" by reformers, Mr. Christopher said he hoped they would "be very conscious of the pain that takes place in the transition" from Communism to capitalism. Speedy Reform Encouraged

Although the United States and the other Western nations have little direct influence on Russian politics, they have encouraged the speedy pace of reform by tying loans from the International Monetary Fund to the pace of economic change.

Worried about Russia's huge budget deficit and high inflation rate, the I.M.F. has adhered to a strict lending policy, calling for action on those fronts before money would be handed over. As a result, the fund has lent Russia only half of a promised $3 billion, a situation criticized last week in Moscow by Vice President Al Gore, who said the I.M.F.'s board was not sensitive enough to the hardships the Russian people faced.

While Mr. Talbott was careful not to criticize the I.M.F. or call directly for a change in its policy, changing the pace of reform would require some loosening of the fund's standards.

Mr. Talbott also said the Administration was considering the expansion of a strong social "safety net" for the Russian people, but he either was unable or unwilling to say where the money would come from. Other officials were quick to insist that the United States would not go beyond the $2.5 billion it has already set aside for the nations of the former Soviet Union for next year.

Projects that would have a direct effect on ordinary Russians would most likely require an injection of aid from the World Bank, the I.M.F. or the international community.

Other senior officials have said that neither the United States nor the rest of the international community has the money or the desire to bail out Russia, knowing that much of the money would not be repaid. For their part, Russian officials want the money to come in grants, not loans.

"To create a huge social safety net would be very expensive, and we don't have the money," a senior Administration official told reporters after a formal briefing at the White House last week. "There is no collection of countries that can do that."

But one clear implication of Mr. Talbott's remarks was that the United States might be willing to endorse a slower approach to reform if that meant meeting the everyday needs of the Russian people and thus steeringthem away from the far left or far right who offer bread instead of statistics. A Safety Net

Some officials hope that Russia can push ahead with privatizations and other changes as fast as before if a sizable safety net is stitched together.

The comments by Mr. Talbott reflected the sobering effect last week's vote totals have had on the Administration and particularly on him. Until a few days before the election, he, like many other Russia experts in the Government, dismissed suggestions that the Russian people would choose a Parliament that the United States could not wholehearedly embrace.

By contrast, in analyzing the unexpectedly strong showing by the far-right party of Vladimir Zhirinovsky, Mr. Talbott said today that there was no question the Russian people "were sending a message to their leadership, and their message was that reform, as it has been carried out to date, has been accompanied by a lot of disruption, a lot of disorder and a lot of hardship for the average Russian citizen."

He refrained from repeating past Administration appeals to reform as fast as possible, describing the Administration's current view in different terms. "It might be a mistake to cast it in terms of fast and slow," he said, adding, "Rather than thinking of it in terms of slowing reform down, I would say it's more a concept of broadening the concept of reform."

In explaining what he meant by the "broadening" of reform, Mr. Talbott said, "Rather than focusing just on the economic indicators, which are important and which will remain important -- economic indicators such as inflation rates, levels of credit emissions to large state enterprises and that kind of thing -- they and we also have to factor into our policies the social factors, which you might call the misery index -- unemployment, people's sense of being afraid on the streets, being afraid of the future -- that kind of thing."

Mr. Talbott argued that the Yeltsin Government must adopt measures to ease the effect of the transformation from Communism to capitalism and that advisers of Mr. Clinton were preparing specific recommendations for his summit meeting with Mr. Yeltsin in Moscow in January. Balance Is Needed

"There is going to have to be a balance between the economic imperatives and also the political imperatives of keeping Russia on the path toward democratization and economic reform," Mr. Talbott said in briefing reporters today after his trip to Russia and other parts of the former Soviet Union with Vice President Gore.

Jeffrey Sachs, an Harvard economist who advises the Yeltsin Government, said in a telephone interview from Switzerland that if $4 billion to $5 billion could be added to a social safety net, it would "go far, but not go all the way." He added, "It's not enough to say, as I fear they'll say, 'Oh, we'll add $1 billion or $2 billion to a safety net.' That will be received with the same zero credibility as much of the aid that has been received so far."

Mr. Sachs said money for a safety net might come from the World Bank, which has already lent $60 million for such social services and is considering an additional $500 million. -------------------- Constitution Approved

MOSCOW, Dec. 20 (Reuters) -- Russia's new Constitution has been formally approved by a majority of voters after a referendum this month and will go into effect Tuesday, the Central Electoral Commission said today.

An electoral spokesman said final official results showed 54.8 percent of Russia's 106,170,335 eligible voters took part in the referendum. Of those who voted, 58.4 were in favor of the new Constitution and 41.6 against it.

Photo: Secretary of State Warren Christopher leaving a closed meeting with the Congress of Presidents of Major American Jewish Organizations in New York yesterday. At a newws conference, he said Russia's recent election should be taken as a "wake-up call" by reformers, adding that he hoped they would "be very conscious of the pain that takes place in the transition" from Communism to capitalism. (Dith Pran/The New York Times) (pg. A14)